City of Sudbury tries to recover $1.5 million sent to Toronto bank account set up by scammers

The City of Sudbury says it was scammed out of more than $1.5 million last month when it was tricked into transferring cash to a bank account set up by scammers in Scarborough town centre.

In a lawsuit filed in Toronto earlier this month, the City of Sudbury alleges that unknown suspects “infiltrated” email accounts associated with a construction company contracted to build affordable modular rental housing in the northern Ontario municipality.

The suspects, according to the statement of claim, gained access to a legitimate project manager’s email and posed as the employee in communications with the city.

The scammers convinced city staff to send a wire transfer of $1,501,380.66 to a different bank account than the one originally opened by the construction company, the lawsuit alleges.

The city is now trying to recover that money, seeking a court order to force several major banks to track down the funds, freeze them and return the cash to the city.

Also named in the lawsuit is a numbered Ontario company based on Blakely Road in North York.

“The illegal activity was quickly detected by staff and we are confident that we will be able to recover the majority of these funds,” read a statement from a city spokesperson.

“The process to recover these funds is lengthy and involves several external agencies, such as the contractor, our insurer, banks and courts.”

According to the statement of claim, prior to the transfer, city staff noticed the discrepancy between the bank account information and contacted the company to provide more documentation. The lawsuit alleges that the suspects “intercepted” those emails and proceeded to create and provide “fraudulent and forged documents” to perpetrate the theft.

The money was transferred to the scammers on Dec. 21 to an account opened at a Scotiabank branch in downtown Scarborough, the lawsuit claims, and that account has since been frozen.

About a week passed before it was discovered that the construction company did not actually receive the transferred money, the lawsuit says.

Internal review, police investigation underway

In a statement to CP24.com, Scotiabank spokesperson Katie Raskina said this was an “external fraud event unrelated to any conduct by the bank.”

“…we are cooperating with the investigation to help recover funds lost due to fraudulent activities,” the statement read. “As this matter is before the courts, we cannot comment further.”

The city said municipalities and the public are now facing more “sophisticated” fraud cases.

“Municipalities, like residents, face complex fraud problems. While we work proactively to prevent these types of events and continually evaluate and implement changes to address them, fraud events are becoming increasingly sophisticated,” read the city’s statement to CP24.com.

“The Greater Sudbury Police Service is investigating and we are conducting a detailed internal review of the matter.”

Schedules and work on the Lorraine Street Transitional Housing project, the 40-unit affordable housing building at the center of the incident, “are not affected” by the fraud, the city said.


Leave a Comment